nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2007‒11‒03
seven papers chosen by
Erik Thomson
University of Chicago

  1. The Impact of Milton Friedman on Modern Monetary Economics: Setting the Record Straight on Paul Krugman's "Who Was Milton Friedman?" By Edward Nelson; Anna J. Schwartz
  2. How to be an Ecological Economist By Malte Faber
  3. "Behavioral Aspects of Implementation Theory" By Hitoshi Matsushima
  4. A Theory of Reference-Dependent Behavior By Jose Apesteguia; Miguel A. Ballester
  5. What Professor Rodrik Means by Policy Reform: Appraising a Post-Washington Paradigm By Derek Headey
  6. Will Monetary Policy Become More of a Science? By Frederic S. Mishkin
  7. Society, firm, individual : the striking topicality of Taylor’s “vision of the world” By Solé, Andreu; Maggi, Bruno

  1. By: Edward Nelson; Anna J. Schwartz
    Abstract: Paul Krugman's essay "Who Was Milton Friedman?" seriously mischaracterizes Friedman's economics and his legacy. In this paper we provide a rejoinder to Krugman on these issues. In the course of setting the record straight, we provide a self-contained guide to Milton Friedman's impact on modern monetary economics and on today's central banks. We also refute the conclusions that Krugman draws about monetary policy from the experiences of the United States in the 1930s and of Japan in the 1990s.
    JEL: E31 E51 E58
    Date: 2007–10
  2. By: Malte Faber (University of Heidelberg, Department of Economics)
    Abstract: To answer the question "How to be an Ecological Economist", we must start by defining the field of Ecological Economics. Mainstream Economics altogether lacks the concepts required to deal adequately with nature, justice and time. It was the absence of these three concepts in this otherwise great social science that led to the establishment of Ecological Economics. The interest in nature, justice and time is its defining characteristic. The main thesis of this paper is that our field is a fragile institution and that the professional existence of an ecological economist is no less fragile. However, this very fragility also represents freedom, scope for free thinking, conceptualising and research. Nevertheless, to be able to really use and in turn enjoy the full scope of this freedom, an ecological economist needs certain specific characteristics, in particular what is termed in the German philosophical tradition "Urteilskraft" and in English "power of judgement". A description of these characteristics is developed in this paper, providing an answer to the question "How to be an ecological economist?"
    Keywords: ecological economics; mainstream economics; political economy; nature; justice; time; growth; power of judgement
    JEL: A10 A12 A13 B10 Q00 Q57 O40
    Date: 2007–10
  3. By: Hitoshi Matsushima (Faculty of Economics, University of Tokyo)
    Abstract: This paper incorporates behavioral economics into implementation theory. We use mechanisms that are strictly detail-free. We assume that each agent dislikes telling a white lie when such lying does not serve her/his material interest. We present a permissive result wherein by using just a single detail-free mechanism, any alternative can be uniquely implemented in iterative dominance as long as the agents regard this alternative as being socially desirable.
    Date: 2007–10
  4. By: Jose Apesteguia; Miguel A. Ballester
    Abstract: Extensive field and experimental evidence in a variety of environments show that behavior depends on a reference point. This paper provides an axiomatic characterization of this dependence. We proceed by imposing gradually more structure on both choice correspondences and preference relations, requiring increasingly higher levels of rationality, and freeing the decision-maker from certain types of inconsistencies. The appropriate degree of behavioral structure will depend on the phenomenon that is to be modeled. Lastly, we provide two applications of our work: one to model the status-quo bias, and another to model addictive behavior.
    Keywords: Individual rationality, reference-dependence, rationalization, path independence, status-quo bias, addiction, habit formation, LeeX
    JEL: A12 B41 D11
    Date: 2007–10
  5. By: Derek Headey (CEPA - School of Economics, The University of Queensland)
    Abstract: This article reviews Professor Dani Rodrik’s work on growth and development. The review first provides an outline of Rodrik’s critique of the Washington Consensus and his alternative ‘post-Washington’ paradigm for formulating and implementing growth strategies. The remainder of the paper then critically assesses some key elements of this alternative vision for development. In particular, the critical analysis focuses on Rodrik’s institutionalist revision of the existing growth evidence, his proposed changes to the way in which economists formulate policies in a post-Washington era, and his call for greater democratization as a universal institutional reform.
    Date: 2007
  6. By: Frederic S. Mishkin
    Abstract: This paper reviews the progress that the science of monetary policy has made over recent decades. This progress has significantly expanded the degree to which the practice of monetary policy reflects the application of a core set of "scientific principles". However, there remains, and will likely always remain, elements of art in the conduct of monetary policy: in other words, substantial judgment will always be needed to achieve desirable outcomes on both the inflation and employment fronts. However, as case studies discussed here suggest, even through art will always be a key element in the conduct of monetary policy, the more it is informed by good science, the more successful monetary policy will be.
    JEL: E2 E44 E52 E58
    Date: 2007–10
  7. By: Solé, Andreu; Maggi, Bruno
    Abstract: This study highlights the need, in both teaching and research, to come back to the original texts of great authors and to situate each “ vision of the world” in a long term historical perspective.
    Keywords: Taylor; vision of the world; utopia; organisation; work; firm; individual; society; history
    JEL: B31 L23
    Date: 2007–10–25

This nep-hpe issue is ©2007 by Erik Thomson. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.